Why does the market for black rhinos create incentives that are different than other markets? How can these markets be changed?
The market for black rhinos is based on the value of the horn of the rhino. Rhinos' horns can be approximately up to $30K. This creates incentives for hunters to kill the rhinos, cut off their horns, and sell them in the black market. Rhinos eventually became endangered. Resources are scarce, so the value of the rhino's horns rose. Government tried changing these incentives by hunting rhinos, cutting off their horns, and then releasing them into the wild once again, however, hunters still hunted the endangered species for their trunks carried some value. These incentives are different than other markets because rhinos are public property, whereas in most markets, most property is private. Thus, everyone can hunt them and no one has the incentive to take care and preserve the animals. If rhinos were private property where only a limited number of people could own the animal, the owner would have the incentive to preserve the animal and breed it for future business. If the animal becomes extinct, then the owner loses his business. He has the incentive to kill while still preserving the animal.
Tuesday, September 11, 2012
Thursday, September 6, 2012
Power of Markets
Prompt:
Discuss three significant ideas or arguments that Whelan is making about markets. Be specific and provide examples:
1.) Whelan argues that in the tech business, there are many competitors, however, it is the competitor that consumers go to the most that will continue to gain profit. One example would be apple. Since apple already sells to a large amount of people, people will continue to purchase from them due to the compatibility with other apple devices. If you want to by a phone and you already have a mac, you will most likely look to purchase an iPhone due to the compatibility it shares with a mac.
2.) Another argument that Whelan poses is that there are varying incentives for people in the world. Most people want to graduate high school, go to college, and receive a degree. However, that incentive may change if the right opportunities arrise. Whelan uses LeBron James as his example. LeBron went to high school in Akron, Ohio. He had the choice to go to college and graduate, but before he even graduated, Nike had already chosen to sponsor him to a 100 million dollar deal. LeBron had the incentive to get drafted to the Cleveland Cavaliers where he can make a huge profit. In his first season, he was offered $15 million.
3.) Whelan argues that, in the entertainment business, a small margin of talent makes a huge difference in salary. Likewise to LeBron having the incentive to enter the NBA, he was a bit more talented than the majority of basketball players. Whelan says that all players are almost equally talented, but the ones who have some more skills are the ones who make it in the market.
Discuss three significant ideas or arguments that Whelan is making about markets. Be specific and provide examples:
1.) Whelan argues that in the tech business, there are many competitors, however, it is the competitor that consumers go to the most that will continue to gain profit. One example would be apple. Since apple already sells to a large amount of people, people will continue to purchase from them due to the compatibility with other apple devices. If you want to by a phone and you already have a mac, you will most likely look to purchase an iPhone due to the compatibility it shares with a mac.
2.) Another argument that Whelan poses is that there are varying incentives for people in the world. Most people want to graduate high school, go to college, and receive a degree. However, that incentive may change if the right opportunities arrise. Whelan uses LeBron James as his example. LeBron went to high school in Akron, Ohio. He had the choice to go to college and graduate, but before he even graduated, Nike had already chosen to sponsor him to a 100 million dollar deal. LeBron had the incentive to get drafted to the Cleveland Cavaliers where he can make a huge profit. In his first season, he was offered $15 million.
3.) Whelan argues that, in the entertainment business, a small margin of talent makes a huge difference in salary. Likewise to LeBron having the incentive to enter the NBA, he was a bit more talented than the majority of basketball players. Whelan says that all players are almost equally talented, but the ones who have some more skills are the ones who make it in the market.
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